Memorandum of Sale: What You Need to Know

Are you reaching the stage of house-buying where a memorandum of sale needs to be issued? You’ll no doubt be wondering ‘what is a memorandum of sale?’. Or perhaps you’re considering buying or selling and want to know the exact process you’ll be following once a sale is being negotiated.

With over 15 years of experience as trusted estate agents in the North West behind us, the property experts at JonSimon are here to give you simple answers to these all-important questions.

If you’re looking to make a property change like buying a house or selling a rented property, get in touch today to get the ball rolling with JonSimon’s experienced estate agents in Burnley.

What is a memorandum of sale?

The memorandum of sale document confirms the key details of the sale, regarding the property, the buyer and the seller. It acts as a summary of the sale and can sometimes be known as a ‘Notification of Sale’. Issuing this document signifies to all parties that the property is no longer ‘Under Offer’ and has moved to the status ‘Sold STC’.

Memorandum of sale meaning: Simply put, the memorandum acts as a written record of an offer on the property which has been accepted and which is viable to take place.

What does a memorandum of sale look like?

This document covers a wide range of points from information on the property to detailed information on both the seller and the buyer:

Details about the property

• Confirmation of the address of the property
• HM Land Registry number and confirmation of ownership to check that the buyer does in fact have current possession of the property
• Agreed sale price
• Confirmation of the address of the property
• Whether the property is freehold or leasehold – if leasehold, how many years remain on the lease
• If it’s an auction property, the date of when the hammer fell and who the auction company enabling the sale of the property were
• Whether fixtures and fittings are included in the property sale or any exclusions
• Any other relevant information to the sale of the property such as notable legal issues that might hold the sale up pending investigation e.g. right-of-way disputes

Details about the buyers and sellers

• Contact details for the buyer and seller, such as phone number, email and current address, including whether it’s being bought by individuals or a company
• Details of the solicitors representing both parties
• Which mortgage lender the sellers have opted for and confirmation of the mortgage in principle and the name of the broker if acquired through one
• How much the deposit is, the percentage of the property value that the
• Desired completion date (if possible) or any requirements on the date of the sale such as a delayed completion date
• Whether the deposit funds have been verified
• Details of the property chain, i.e. whether the sellers are buying a property and whether the completion of this property is dependent on this sale

What is the purpose of a memorandum of sale?

In other words, what is a memorandum of sale used for? In practical terms, the memorandum signifies that the sale is ready to move forward into conveyancing.

It’s important to know that although the memorandum of sale is passed on to legal professionals in conveyancing, it is not a legal document. It also isn’t signed by either party in the sale. Its purpose is to signify the intent of both parties to move forward with the sale and hold the key information in one place.

As the information is highly sensitive and confidential often you won’t see the memorandum, even if it’s your property.

What issues can arise during the memorandum of sale?

For the most part, the memorandum of sale process is fairly straightforward as it’s not a legally binding document, however, there are issues that can arise that can cause problems and extend the time of the process.

While it is not legally binding, it marks an important step in the property sale process. Several issues can arise during this stage, including:

Admin errors

Something as small as a misspelt name or the wrong number in an address can cause a huge number of issues. Not only will this need time to change and have the document reissued, but if this goes unnoticed it can lead to more serious issues and disputes further down the line should anything official be signed with incorrect information.

Communication issues

Estate agents may have to deal with a number of sales at one time which can lead to delays in contact and preparing documents. This can extend the time of the process.

Disputes

Sellers or buyers trying to negotiate sale terms can not only slow or completely stop the sale process but can also lead to tension if either party continues to try to negotiate after the memorandum has already been issued and agreed to.

Financial problems

If your buyer is still waiting for their mortgage approval or is struggling to find deposit funds then this can extend the sale time and also lead to a sale potentially falling through.

Gazumping and Gazundering

A different buyer can offer a higher offer for the property and the seller can then back out of the memorandum. This can also go the other way and a buyer can lower their initial offer after the memorandum and this can cause the seller to back out or halt the sale.

Withdrawal

Because the memorandum of sale isn’t legally binding, both the buyer and the seller can back out of the sale at any time. This means that there is no pressure to be held to the memorandum and a sale can fall through many times at this early stage.

Property chain issues

Issues along the property chain are most commonly what affect the sale of a property. This could be things like your buyer struggling to sell their current property which can delay their buying process.

You can help mitigate these risks by ensuring that you’re communicating clearly with potential buyers and their legal representatives and carefully checking all documents before releasing them.

You can also reduce the chance of errors, disputes and misunderstandings by hiring a solicitor to help sell your property.

What happens after the memorandum of sale is issued?

The memorandum is passed on to both the buyer and seller’s solicitors to indicate that they should proceed with the conveyancing process. Both the buyer and the seller will work with their solicitors to exchange any necessary documents and details to draw up the legal sales contracts, including the title deed transfer.

This is the point in the process where the buyer will issue any surveys to check on the condition of the property. Both parties will liaise with their solicitors with the information to progress the sale and sell your house.

Memorandum of sale- What’s the timeline?

Your property sale can’t go through unless you’ve got a memorandum of sale and this can be issued almost immediately within a day or longer at around a week depending on how quickly all parties can obtain any important information.

The sale of a property is a lengthy process due to all of the paperwork involved, taking an average of 12 weeks for a sale to go through. Of course, this can be shorter or much longer depending on what potential blockers pop up. During the sale process buyer checks, financial and eligibility checks will all take place and a deposit will also be paid.

For more on the timeline of buying, you can check out our blog on how long it takes to buy a house.

Book your free valuation today with JonSimon

Whether you’re buying a new property or selling your current one at JonSimon we can help make the process easy. We have decades of experience selling properties in Greater Manchester and the North West, with hundreds of reviews from customers about their positive experiences with our team.

To get in touch, just email info@jonsimon.co.uk or call our Burnley, Radcliffe or Ramsbottom team. If you’re on the hunt for a new property we’ve a range of stunning homes in desirable areas like houses for sale in Ramsbottom and houses for sale in Bacup.

FAQs

Is a memorandum of sale legally binding?

No, a memorandum of sale for a property is not legally binding. It is simply a typical part of the property sale process and a key document for solicitors to have which holds the essential details of the upcoming sale in one place.

How to get a memorandum of sale

The memorandum of sale is drawn up by estate agents selling the property, such as one of JonSimon’s property experts.

Who receives the memorandum of sale?

The memorandum is sent to the conveyancing solicitors for both the buyers and the sellers. If you don’t have a solicitor involved in your sale an estate agent will send the documents directly to the buyer and seller.

How long will it take after the memorandum of sale to complete?

The length of time to complete will depend on many factors including how long the property chain is, how many surveys and checks are required and if there are any peculiarities to the property that slow the legal process.

The average time for a property to go from offer to completion in the UK is usually somewhere around 3-6 months but this will vary for different counties and urban vs. rural areas.

How long does a memorandum of sale take to be issued?

The process of putting together the memorandum of sale should not take long, which might be good news for you if you’re trying to sell your house fast. The process involves gathering information from the buyers and sellers by the estate agent selling the property. Typically, this will take only days.

Can you pull out after a memorandum of sale?

Yes. There are no legal ramifications for pulling out of the sale once the memorandum has been issued. This means both the buyer and seller can withdraw until the point of sale has been finalised with legal documentation.